1 2 3 4 5 6 7 8 9 MEADOWLARK LEMON, a married man, 10 Plaintiff, 11 vs. 12 13 14 15 16 17 HARLEM GLOBETROTTERS INTERNATIONAL, INC., an Arizona corporation; HARLEM GLOBETROTTERS INTERNATIONAL FOUNDATION, INC., an Arizona corporation; MANNIE L. JACKSON and CATHERINE JACKSON, husband and wife; FUBU THE COLLECTION, LLC, a New York limited liability company doing business in Arizona; GTFM, LLC, a New York limited liability company doing business in Arizona; PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT Case Nos.: CV 04 0299 PHX DGC and CV-04-1023 PHX DGC Morgan & Morgan, P. A.th 20 N. Orange Avenue, 16 Floor Orlando, FL 32801 Clay M. Townsend, Esquire Bar No.: 023414 Brandon S. Peters, Esquire Bar No.: 022641 Keith R. Mitnik, Esquire Bar No.: 436127 Attorneys for Plaintiffs UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA
18 Defendants. 19 FRED "CURLY" NEAL, LARRY "GATOR" 20 RIVERS, DALLAS "BIG D" THORNTON, ROBERT "SHOWBOAT" HALL, MARQUES 21 HAYNES and JAMES "TWIGGY" SANDERS, 22 23 Plaintiffs, vs.
HARLEM GLOBETROTTERS INTERNATIONAL, an Arizona corporation; HARLEM 24 INC., GLOBETROTTERS INTERNATIONAL 25 FOUNDATION, INC., an Arizona corporation; MANNIE L. JACKSON and CATHERINE 26 JACKSON, husband and wife; FUBU THE COLLECTION, LLC, a New York limited liability company, GTFM of Orlando, LLC; and GTFM, LLC, a
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1 New York limited liability company doing business in Arizona, 2 Defendants. 3 HARLEM GLOBETROTTERS INTERNATIONAL, INC., an Arizona corporation, 4 Counter-claimant, 5 vs. 6 MEADOWLARK LEMON, a married man, 7 8 9 10 11 12 13 14 15 16 17 Plaintiffs have previously moved this Court to voluntarily dismiss FUBU the Collection, LLC and GTFM of 18 Orlando, LLC without prejudice. 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF LAW Jackson formed HGI in 1993, and neither he nor HGI were ever a party to any written or oral agreement with Plaintiffs authorizing the exploitation of Plaintiffs' names. It is undisputed that Plaintiffs have never, ever signed any agreement with HGI or Jackson, much less an agreement that even remotely relates to Plaintiffs' rights to publicity. Neither Jackson nor his agents ever contacted any of these Plaintiffs at all related to any marketing or merchandise ideas. (Exhibit "1(A)"). It is undisputed that neither Jackson, HGI nor any officer, agent or attorney obtained the authority of Plaintiffs for any of their rights of publicity either generally, or specifically for the FUBU Licensing Agreement. PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT PLAINTIFFS, FRED "CURLY" NEAL; LARRY "GATOR" RIVERS; DALLAS "BIG D" THORNTON; ROBERT "SHOWBOAT" HALL; MARQUES HAYNES; and JAMES "TWIGGY" SANDERS, (hereinafter "PLAINTIFFS"), by and through their undersigned attorneys and pursuant to Fed.R.Civ.P.56, hereby move this Court for an order granting summary judgment against Harlem Globetrotters International, Inc., Harlem Globetrotters International Foundation, Inc., Mannie and Catherine Jackson (hereinafter collectively "HGI") and GTFM, LLC (hereinafter collectively "FUBU"). Counter-defendant.
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In June of 2002 HGI entered into an agreement with FUBU and others to license, develop, create, produce, manufacture, market, promote, sell, and distribute apparel products, goods, and other merchandise, and under the agreement HGI authorized the use of the names and likenesses of any and all players who have played for the Harlem Globetrotters, or who thereafter play for the Globetrotters during the term of the agreement, other than Wilt Chamberlain and Magic Johnson. (Exhibit (6"). FUBU then
6 began manufacturing and selling a Harlem Globetrotters clothing line that bore Plaintiffs' names, likenesses, 7 8 9 10 11 12 13 14 15 16 In September of 2004, counsel for HGI sent a letter containing one old contract from 1985 to 17 Plaintiff's counsel stating that HGI was relying on the 1985 Gator Rivers Contract (Exhibit "3(F)"), saying it 18 19 20 21 22 23 24 25 26 for the moving party as a matter of law). 27 I LANHAM ACT CLAIMS: 28 was "typical." Plaintiffs filed suit and discovered the contract provided was not "typical" (Exhibit "3") and there were Collective Bargaining Agreements conferring additional rights. (Exhibit "2"). There is no agreement or contract between Plaintiffs and HGI or FUBU in which Plaintiffs gave HGI or FUBU the right to use their names, likenesses and player numbers in a clothing line. SOF ¶17,19. The Court should grant Plaintiffs' Motion for Summary Judgment because there is no issue as to any material fact and Plaintiffs are entitled to summary judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 424 (1986) (Summary judgment appropriate where undisputed facts warrant judgment and player numbers and has been marketed, offered for sale and sold in interstate commerce in the United States and other countries. (Exhibit "9(C)"). Additionally, much of the Harlem Globetrotter's apparel sold by FUBU had hang tags listing the Plaintiffs' names, which were used as marketing tools. (Exhibit "12"). The contract between HGI and FUBU did not mention the use of any of Plaintiffs' names. FUBU simply accepted Mannie Jackson's assertions that he owned the right to use Plaintiffs' names, likeness, and player numbers in perpetuity, without even looking at Plaintiffs' contracts with HGI. SOF ¶11. Plaintiff's counsel sent a letter to HGI and Mannie Jackson, requesting documentation of their authority to use Plaintiffs' names, images, likenesses, numbers, notoriety, and goodwill. (Exhibit "11").
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FEDERAL UNFAIR COMPETITION/FALSE DESIGNATION OF ORIGIN AND MISAPROPRIATION. "Any person who, on or in connection with any goods or services...uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion... or to deceive as to the affiliation, connection, or association of such person with another
6 person, or as to the origin, sponsorship, or approval of his or her goods... shall be liable in a civil action by 7 8 9 10 11 12 13 14 15 16 likely to cause confusion with plaintiff's prior use of the name. New West Corp. v. NYM Co. of California, 17 Inc., 595 F.2d 1194, 1198 (9th Cir. 1979). In determining the issue of likelihood of confusion, the factors 18 19 20 21 22 23 24 25 26 HGI did not have the right to use Plaintiffs' names and likenesses, or to license them to a third 27 party. Plaintiffs are the only persons who possess the right to use his name and likeness on products, and 28 that are relevant include: 1) similarity of the marks; 2) relatedness of the products; 3) intent of the defendant in selecting the mark; 4) strength of plaintiff's mark; and 5) actual confusion. See Golden Door, Inc. v. Odisho, 646 F.2d 347, 349-350 (9th Cir. 1980), White v. Samsung Electronics America, Inc., 971 F.2d 1395, 1400 (9th Cir. 1992). In cases involving confusion over endorsement by a celebrity plaintiff, "mark" means the celebrity's persona. Id. The "strength" of the mark refers to the level of recognition the celebrity enjoys among members of the society. Id. Also, when determining Defendant's intent, the relevant question is whether the Defendant intended to profit by confusing consumers concerning the endorsement of the product. Id. any person who believes that he is or is likely to be damaged by such act. 15 U.S.C. § 1125(a). Section 43(a) of the Lanham Act creates a civil cause of action for celebrities because they possess an economic interest in their identities akin to that of a trademark holder. Parks v. LaFace Records, 329 F.3d 437, 445 (6th Cir. 2003). Such a celebrity must show that the use of his name is likely to cause confusion among consumers as to the connection between the celebrity and the defendant's goods or services. Id. The purpose of the Lanham Act is to protect commercial parties against unfair competition. Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1108 (9th Cir. 1982). The test for trademark infringement, unfair
competition or violation of section 43(a), 15 U.S.C. § 1125(a), is whether defendant's use of the name is
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Plaintiffs are the only persons who may give consent to a third party to use his name and likeness. SOF ¶68, 40, 44, 45. However, HGI licensed to FUBU, the right to use the names, likenesses, and player numbers of Harlem Globetrotter players on products and clothing produced by FUBU. SOF ¶8. Some of that clothing bore Plaintiffs' names and likenesses. SOF ¶9. HGI and FUBU clearly profited from the sale of the clothing bearing Plaintiffs' names and likenesses. (Exhibit "9(D)").
6 The use of their names in conjunction with a clothing line, especially sports apparel such as 7 8 9 10 11 12 13 14 15 16 17 18 2d 1108, 1111 (D. Ariz. 2000) (emphasis added). Downing v. Abercrombie and Fitch, 265 F.3d 994 (9th Cir. 19 2001). 20 21 22 23 24 25 26 27 28 To prevail on summary judgment on the claim of right to publicity, Plaintiffs must establish the use of Plaintiffs' identity, the appropriation of Plaintiffs' name or likeness to HGI's and FUBU's advantage, commercially or otherwise, lack of consent of Plaintiffs, and resulting injury to Plaintiffs. First, HGI used Plaintiffs' identity by licensing it to FUBU to produce sports apparel featuring Plaintiffs' name and likenesses. The Ninth Circuit has also held that a right of publicity may not be sublicensed without notice and permission. Miller v. Glenn Miller Productions, 318 F.Supp. 923 (C.D. Cal 2004) at [14](3). Second, HGI and FUBU clearly profited from the licensing of Plaintiffs' name and likeness basketball jerseys, implies to the public that Plaintiffs are endorsing, or has given approval, to the product. Not only did HGI and FUBU use Plaintiffs' names on clothing, but it was used in connection with the one team for which Plaintiffs are most recognized, the Harlem Globetrotters. However, Plaintiffs were not then involved with the Harlem Globetrotters, and had not been for years, in some cases decades. Furthermore, when entering into the contract with HGI, FUBU did not do due diligence with regard to verifying whether HGI had the authority to license Plaintiffs' names and likenesses to FUBU. SOF ¶11. II - COMMON LAW INVASION OF THE RIGHT OF PUBLICITY The common law right of privacy includes protection against appropriation, for the defendant's advantage, of the plaintiff's name or likeness. Pooley v. National Hole-In-One Association, 89 F. Supp.
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and the sale of the clothing bearing the Plaintiffs' names. SOF ¶25, selling over $60 million in total retail sales in the first two years. SOF ¶25. Third, Plaintiffs did not give their consent for HGI to use their names and likenesses in the manner that they were used in the licensing agreement with FUBU and the resulting apparel. SOF ¶6. It is undisputed that the FUBU received no direct, express, written or oral authority from Plaintiffs
6 to exploit Plaintiffs' rights of publicity. It is undisputed that none of FUBU's officers or agents ever 7 8 9 10 11 12 13 14 15 16 established all of the elements required to prevail on summary judgment for a claim of violation of their 17 rights to publicity. Because there is no issue as to any material fact regarding HGI's and FUBU's invasion 18 19 20 21 22 23 24 25 26 27 28 of the Plaintiffs' right of publicity, Plaintiffs are entitled to summary judgment against HGI and FUBU as a matter of law. III - UNJUST ENRICHMENT Quantum Meruit is the measure of damages imposed when a party prevails on the equitable claim of unjust enrichment. Western Corrections Group, Inc. v. Tierney, 208 Ariz. 583, 590, 96 P.3d 1070, 1077 (2004). To recover such damages, the party must prove the following elements of unjust contacted any of the Plaintiffs to obtain their permission not a letter, not a phone call. SOF ¶6, 18. FUBU's purported authority was solely the representations of Mannie Jackson that he owned in perpetuity, for any purpose, the names of Plaintiffs, some of whom hadn't been employed by any of the Globetrotters companies for thirty years. Arizona recognizes, as a type of invasion of privacy, the distinct tort of appropriation of the Plaintiffs' names and likenesses for these defendants' advantage. Phoenix Newspaper, Inc., 783 P. 2d 781 (S.C. Arizona 1989). Lastly, Plaintiffs were injured by HGI's and FUBU's use of their names and likeness on the FUBU clothing. Plaintiffs were not compensated for the use of their names and likenesses. Plaintiffs have Godbehere v.
enrichment: 1) the other party was unjustly enriched at the expense of claimant, 2) the claimant provided a benefit to the other party, and 3) the claimant conferred this benefit under circumstances that would render inequitable the other party's retention of the benefit without payment. Id.
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HGI and FUBU had no right to use, or license for use, Plaintiffs' names and likenesses as HGI did by entering into the contract with FUBU. Plaintiffs were and are the only persons who have the authority to use and consent to the use of their names and likenesses in connection with any product. However, HGI exploited Plaintiffs' protected right to the exclusive use of their names and likenesses as if it were a trademark, by contracting with FUBU to put Plaintiffs' names on a clothing line.
6 Plaintiffs conferred a benefit on HGI and FUBU under circumstances that would render inequitable 7 8 9 10 11 12 13 14 15 16 or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the 17 other would be placed. Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 338, 783 P.2d 781, 784 18 19 20 21 22 23 24 25 26 A: 27 28 HGI and FUBU Are Liable To Plaintiffs For False Light Invasion Of Privacy. (1989). The plaintiff in a false light case must prove that the defendant published with knowledge of the falsity or reckless disregard for the truth. Id. However, the element of "extreme and outrageous" conduct is not required. Id. Therefore, a court could find that Defendant's publication of false HGI's and FUBU's retention of the benefit without payment because it is Plaintiffs that are entitled to the profits from the sale of the clothing bearing their names and likenesses. HGI had no authority to license Plaintiffs' names and likenesses to a third party, and exploited Plaintiffs when it did so solely for its own commercial benefit IV - FALSE LIGHT-INVASION OF PRIVACY One who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for the invasion of his privacy if: 1) the false light in which the other was placed would be highly offensive to a reasonable person, and 2) the actor had knowledge of
information or innuendo satisfies the false light elements without finding that the conduct was extreme and outrageous, even when the publication of true information creates a false implication about the individual. Id. at 341, 783 P.2d at 787 (emphasis added).
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HGI and FUBU knowingly or recklessly published false information or innuendo about them that a reasonable person would find highly offensive because it created a false implication. See Godbehere, 162 Ariz. 335, 341, 783 P.2d 781, 787. First, HGI's and FUBU's use of Plaintiffs' names created a false implication about Plaintiffs, specifically, that they endorsed the clothing line on which their names and likenesses were featured. This
6 placed Plaintiffs in a false light by holding out to the reasonable person that Plaintiffs were involved in 7 8 9 10 11 12 13 14 15 16 V OLD PLAYER CONTRACTS ARE IRRELEVENT OR INVALID 17 A: 18 19 20 21 22 23 24 25 26 entities in 1977 and 1984 that guaranteed all players additional minimum royalty rights as to merchandise 27 (Exhibits "2(B) Article 14.12 and "1(A)"). 28 Jackson's Asset Purchase Agreement is Clear and Unambiguous Plaintiffs' Contracts Were Not Purchased. As a matter law, HGI & Jackson did not have, and could not have, authority to Plaintiffs' rights of endorsement deals and were interested in making a large profit. Additionally, HGI's conduct would be offensive to the reasonable person because HGI literally `stole' Plaintiffs' identities by licensing their names and likenesses to FUBU when HGI did not have the authority to do so. By creating a false implication about Plaintiffs that a reasonable person would find offensive, HGI and FUBU have become liable to Plaintiffs for false light invasion of privacy. Therefore, Plaintiffs are entitled to summary judgment against HGI and FUBU as a matter of law. HGI and Jackson have not produced one material fact to suggest that any direct authority was obtained from Plaintiffs.
publicity. HGI never bought Plaintiffs' contracts (the Asset Purchase & Sale Agreement of August 1, 1993 "Agreement"- is clear and unambiguous. Plaintiffs' player contracts were not mentioned. (Exhibit "D"). It is undisputed that neither Jackson nor his agents or attorneys performed any due diligence as to Plaintiffs' rights or as to Plaintiffs' old player contracts. Jackson testified that neither he nor his agents or attorneys ever looked at any of the Plaintiffs' old player contracts never came up in the negotiations, SOF¶7, nor did Jackson ever look at the Collective Bargaining Agreements executed by other prior "Globetrotter"
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A collective bargaining agreement with respect to terms and conditions of employment prevails over individual contracts between employers and employees concerning those subjects. Hendricks v. Airline Pilots Association, Inc., 696 F.2d 673 (9th Cir. Cal 1993). Summary judgment is appropriate where no discovery would alter the undisputed fact that a collective bargaining agreement is binding and creates rights beyond individual contracts. See Hendricks.
6 Nowhere in this Agreement and the documents that led up to the sale, are Plaintiffs even remotely 7 8 9 10 11 12 13 14 15 16 for aged players and specifically listed the purchased player contracts. HGI refused to fund pension 17 obligations as agreed by HGI's predecessor corporations. 18 19 20 21 22 23 24 25 26 27 28 The selling parties have testified that during the months of negotiating the Agreement with Jackson, Plaintiffs' names or player contracts were NEVER mentioned at all as an asset being purchased, much less specifically listed on the numerous pages of asset exhibits. (Exhibit "1(I)" page 28). When the terms of a contract are clear and unambiguous, the duty of the court is to apply the language as written to the facts of the case and decide the case accordingly. §336 Standards of Construction American Jurisprudence, Second Edition (August 2005). B: Old Publicity Rights Provisions Purported to be "Perpetual" Are Unenforceable and Unconscionable. mentioned. Lou Dunbar's player contract was listed as one of the assets purchased by HGI. Dunbar is the ONLY player named on a FUBU garment whose player contract was listed as an asset conveyed to HGI under the Asset Purchase Agreement (Exhibit "9(A)"). The evolution of the Asset Purchase Agreement over months of negotiations between numerous lawyers made changes to specifically list conveyed contracts by player name to the schedule entitled "Contracts of Players and Personnel,"(Exhibit "5(A)" lists only "Player Contracts" and "Pension Obligatoins" at page 1307, as does (B,C,D) at page 1386 is very different). The last Schedule 2.1(i) (Exhibit "5(D)") deleted the pension funding obligations that had been negotiated by the UBPA for pension security
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Even assuming, arguendo, that HGI and Jackson did buy decades old players contracts emancipated from the supplemental royalty rights imposed by the UBPA Collective Bargaining Agreements, rights HGI purports to enjoy in the names and likenesses of Plaintiffs are, as a matter of law, void and unenforceable because: 1) they are void as against public policy, and; 2) they constitute a non-compete agreement in perpetuity; (HGI relies on paragraph 12(a) of a "typical contract signed by every player who ever walked on
6 the court for the Harlem Globetrotters," (Exhibit "8"), a gross misrepresentation given Plaintiffs' different 7 8 9 10 11 12 13 14 15 16 · 17 18 19 20 21 application of any unconscionable clause as to avoid any unconscionable result. 22 23 24 25 26 27 28 (b) When it is claimed or appears to the Court that the contract or clause thereof may be in the UCC, and it states: (a) If the Court has a matter of law finds the contract or any clause of the contract to have been California Law: California Civil Code §1670.5 is basically a codification of a similar provision contracts. (Exhibit "3"). Unconscionability is a species of voidness for public policy. Factors include weaknesses in the contracting process (gross disparity in the values exchanged, inequality in bargaining power, terms unreasonable favorable to the superior party). Fidelity & Deposit Co. of MD v. Curtis Day & Co., 1993 WL 128073 (N.D. Cal. 1993); Soltani v. Western & Southern Life Ins. Co, 258 F.3d 1038 (9th Civ. Cal). Plaintiffs' old contracts have a variety of choice of law provisions, SOF¶34, 35, 36, 37, 38, 39), but in all jurisdictions referenced, the court may, as a matter of law, invalidate the provisions purporting to grant the use of Plaintiffs' personal names in perpetuity for any purpose, for no consideration.
unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the
unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the Court in making the determination. Under California law, a contract is unenforceable if it is both procedurally and substantively unconscionable. Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir. 2002), cert. denied, 122 S.Ct. 2329, 153 L.Ed. 2d 160 (U.S. 2002). The procedural aspect is manifested by: (1) oppression, which refers to --
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an inequality of bargaining power resulting in no meaningful choice for the weaker party; or (2) surprise, which occurs when the supposedly agreed-upon terms are hidden in a document, while substantive unconscionability, on the other hand, refers to an overly harsh allocation of unjustifiable risks. Navellier v. Sletten, 262 F.3d 923 (9th Cir. 2001), cert. denied, 122 S.Ct. 2623, 153 L.Ed. 2d 806 (U.S. 2002). Substantive unconscionability relates to the effect of the contract or provision. West v. Henderson, 278
6 Cal.Rptr. 570, 575 (1991). A "lack of mutuality" is relevant in analyzing this prong. See Armendariz v. 7 8 9 10 11 12 13 14 15 16 contrary to public policy. See id., 99 Cal.Rptr.2d 745, 6 P.3d at 694. 17 18 19 20 21 · 22 his senses and not under delusion would make on the one hand, and as no honest and fair man would 23 24 25 26 27 28 accept on the other." Estate of Hoffbeck, 415 N.W. 2d 447, 449 (Minn. Ct. App. 1988). Minnesota statutes contain a provision identical to the California statute cited above, though the Minnesota statute is found in the Minnesota codification of the Uniform Commercial Code. See Minn. Stat. §336.2-301. Minnesota Law: Under Minnesota law, a contract is unconscionable if "it is such as no man in The contractual provisions relied upon by HGI are unconscionable under §1670.5 and general California law since it is both procedurally and substantively unconscionable to have an employee give up rights to his name forever for no consideration in order to sign an employment contract. Foundation Health Services, 99 Cal.Rptr.2d 745 (Cal. 2000). The term "focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience." Kinney v. United Healthcare Services, 70 Cal.App.4th 1322, 83 Cal.Rptr.2d 348, 353 (1999). The procedural and substantive elements need not be present in the same degree; essentially a sliding scale is invoked, under which the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required, and vice versa. Soltani v. Western & Southern Life Ins. Co. In Armendariz, the California Supreme Court applied section 1670.5(a) and held that mandatory contractual provisions requiring arbitration of wrongful termination discrimination claims were unconscionable and
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·
Arizona Law: Arizona likewise has a statutory provision which contains the UCC language on See A.R.S. §47-2302. The Arizona Supreme Court has addressed the test for
unconscionability.
unconscionability in Maxwell v. Fidel Woody Financial Services, Inc., 907 P.2d 51 (Az. 1995). The Arizona Supreme Court engaged in a lengthy analysis of the history and elements of unconscionability, and
5 concluded that there need not be both procedural and substantive unconscionability demonstrated but that 6 7 8 9 10 11 12 13 · 14 Atlantic Richfield Co., 396 A.2d 956 (Del. 1978). Tulowitzki notes that the question of unconscionability 15 involved "whether the provision amounts to the taking of an unfair advantage by one party over the other." 16 17 18 19 20 21 22 23 24 termination of employment are disfavored and strictly construed against the employer. Valley Medical 25 Specialist v. Farber, 950 P.2d 1184 (Ariz. App Div.1 1997); Bryceland v. Northey, 772 P.2d 3b (Ariz. App. 26 27 28 1989); Amex Distributing Co, Inc. v. Mascari, 724 P.2d 596 (Ariz. App. 1986, citing Olliver/Pilcher Id. At 960. Section 208 of the Restatement of Contracts states that "if a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result." Some types of terms are not enforced, regardless of context; (i.e. provisions for unreasonably large liquidated damages). See Uniform Commercial Code §§ 2-718, 9-501(3). Restrictive covenants that tend to prevent an employee from pursuing a similar vocation after "a claim of unconscionability can be established with a showing of substantive unconscionability alone." Id. at 59. · Illinois: In Illinois, a procedural and substantive unconscionability analysis is used. See
Kinkel v. Cingular Wireless, 828 N.E. 2d 812 (Ill. Ct. App. 2005), noting that an agreement is substantively unconscionable if "it is overly harsh or one-sided." Id. At 818. Further, a "sliding scale" is used, as it is in California. Delaware: In Delaware, it appears the leading unconscionability test is found in Tulowitzki v.
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Insurance, Inc. v Daniels, 715 P.2d 1218 [1986] ), (holding a 36 month non-competition covenant invalid as a matter of law). The dominant purpose of the player contracts when signed by Plaintiffs was to play basketball not to do a "100 million dollar" clothing deal decades after the termination of the contract. C: The Bankruptcy Proceedings of IBC Extinguished Any Purported Rights Licensed to the Globetrotters. Even assuming, arguendo, that HGI's position is correct that rights in Plaintiffs' names were granted
in perpetuity to Plaintiffs' numerous former employers, such rights were extinguished before HGI came on 7 8 9 10 11 12 13 14 15 16 Plan. The Players' Contracts were not expressly assumed by IBC. 17 IBC was authorized to transfer all of its Globetrotters assets to a Globetrotters Subsidiary (as 18 19 20 21 22 23 24 25 26 rights or obligations of IBC under the Players' Contracts or the IBC pension obligations. The Player 27 Contracts were executory contracts for purposes of Section 365 of the Code on May 26, 1993. IBC rejected 28 defined by the Plan). By an Assignment and Assumption Agreement (Exhibit "5(A)") dated June 7, 1993, IBC transferred to Harlem Globetrotters Inc. ("HG, Inc"), a company owned by NatWest the creditor bank (and not to be confused by HGI formed later by Jackson), its rights in and to all contracts and other agreements listed on Exhibit 1 to the Assignment. Exhibit 1 included reference to "Funding obligations under any pension plans" and "Player contracts" without referring to specific players. On August 1, 1993, HGI entered into an Asset Purchase Agreement, (Exhibit "5(D)"), with Mannie Jackson Associates, Inc. ("Jackson"), pursuant to which, Jackson did not expressly purchase or assume the the scene by bankruptcy proceedings. In the early 1990s, IBC owned the Globetrotter's operations and related assets. On August 30, 1991, IBC filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code ("Code") in the United States Bankruptcy Court for the District of Minnesota. (Jointly Administered Bankruptcy Case No. 4-91-5999). IBC emerged from bankruptcy pursuant to Debtors' Amended Joint Plan of Reorganization as Modified (Exhibit "4(B)") dated May 25, 1993 and confirmed by the Bankruptcy Court's Order entered May 26, 1993, (Exhibit "4(A)"). Pursuant to the Plan, all of IBC's executory contracts were rejected except for those contracts expressly assumed during the course of IBC's bankruptcy case or in connection with the
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all of its Player Contracts pursuant to Article X, Section A of its Plan effective May 26, 1993, the date IBC's Plan was confirmed by the Bankruptcy Court. IBC'S rejection constituted a material breach of the Player Contracts such that IBC had no legal right to assign the benefits of the Player Contracts, including but not limited to the right to assign the purported Licenses. The purported Licenses could not be transferred to HGI pursuant to the Assignment, nor transferred to Jackson pursuant to the Asset Purchase Agreement.
6 Chapter 11 provides debtors such as IBC with a system and framework designed to facilitate a 7 8 9 10 11 12 13 14 15 16 Licenses. In such case, IBC's loss of the purported Licenses was effective prior to the Assignment and Asset 17 Purchase Agreement with Jackson. Section 365(a) of the Code provides that a debtor, "subject to the 18 19 20 21 22 23 24 25 26 Minn.L.Rev. 439, 460 (1973)). Under the Countryman Definition, contracts are executory if they are so far 27 unperformed that the failure of either party to complete performance would constitute a material breach 28 court's approval, may assume or reject any executory contract or unexpired lease of the debtor." The legislative history of section 365 states that the term "executory contract" "generally includes contracts on which performance remains due to some extent on both sides". See Cameron v. Pfaff Plumbing and Heating, Inc., 966 F.2d 414, 416 (8th Cir. 1992), quoted approvingly by the Supreme Court in NLRB v. Bildisco & Bildisco, 465 U.S. 513, 522 (1984). Another commonly accepted definition is the so called "Countryman Definition." See In re Knutson, 563 F.2d 916, 917 (8th Cir. 1977) (quoting V. Countryman, Executory Contracts in Bankruptcy: Part I, 57 reorganization of its business operations. Upon filing a bankruptcy petition under the Code, all of IBC's assets and liabilities are transferred to the bankruptcy estate, including license rights and executory contracts. The debtor's assets and liabilities are administered under the supervision of a bankruptcy judge. Section 365(a) of the Code provides bankruptcy debtors with the right to either assume or reject its executory contracts. A debtor's election to reject an executory contract constitutes a material breach of such contract resulting in the loss of all rights and benefits granted to the debtor by the contract rejected. In re Larson, Inc., 290 B.R. 504 (D. Del. 2003). If the Player Contracts were executory, IBC rejected and breached them and forfeited the purported
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excusing the performance of the other.
Id. In this context, a wide range of agreements constitute
"executory contracts", including employment agreements and license agreements. See In re Kmart Corporation, 290 B.R. 614 (N.D. Ill. 2003); In re Child World, Inc., 147 B.R. 847 (Bkrtcy S.D.N.Y. 1992). The Players Contracts were executory contracts under the Code if performance was due to some extent on both sides. Under Player Contracts and relevant legal authority, both the Players and IBC had material
6 performance obligations upon confirmation of the Plan. Therefore, the Player Contracts were executory 7 8 9 10 11 12 13 14 15 16 Sanders had continuing non-compete obligations upon confirmation of the plan. Plaintiff "Twiggy" 17 Sanders signed a one year Players Contract on September 6, 1990, (Exhibit "3(E)"). As stated, IBC filed its 18 19 20 21 22 23 24 25 26 terms of their player contracts. In addition to the obligation not to sue discussed above, River's and 27 Thorton's Player Contracts (Exhibits "3(D) and 3(E)") each stated that" For the purpose of enabling [IBC] 28 Chapter 11 on August 30, 1991. IBC listed Sander's Player Contract as an executory contract on its Bankruptcy Schedule G. (Exhibit "4(D)"). Although Sander's Player Contract expired prior to confirmation of the Plan, Section 13 of Sander's contract contained a two year prohibition on Sander's ability to compete with IBC, which is a material obligation sufficient to support a finding that a contract is an executory contract. See In re Constant Care Community Health Center Inc., 99 B.R. 697 (Bankr. D.Md. 1989). Sanders had the additional material obligation to refrain from competition upon confirmation of the Plan. Larry Rivers and Dallas Thornton had additional continuing performance obligations under the contracts under the Code. Every license requires continued performance by the licensor in that it must, at least, continue to refrain from suing the licensee for infringement because a license is in essence "a mere waiver of the right to sue." See In re CFLC, Inc., 89 F.3d 673 (9th Cir. 1996) (discussing non-exclusive licenses); see also, In re Hernandez, 285 B.R. 435 (Bankr.D.Ariz.2002) (applying same logic to exclusive licenses). This obligation has been held to constitute a material obligation on the part of a licensor supporting a finding that the agreement in question was executory for purposes of §365(a) of the Code. In re CFLC, Inc., 89 F.3d 673 (9th Cir. 1996).
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and its licensees to exercise the rights hereby granted, Player shall, during the term of its license, participate in live and recorded radio and television programs and commercial announcements, interviews and personal appearances, pose for pictures, record his voice, supply his biographical data and in any way engage in all means and media of advertising, publicity and promotion that will, in [IBC's] reasonable opinion, contribute to the popularity, success and exploitation of the entertainments, products or services produced or
6 presented . . .The relevant language from Thorton's Player Contract expressly reads as follows "Player shall 7 8 9 10 11 12 13 14 15 16 performance obligations remaining under the terms of Rivers' and Thorton's Player Contracts upon 17 confirmation of the Plan. 18 19 20 21 22 23 24 25 26 27 28 IBC Obligations Remaining Under Player Contracts Upon Confirmation Of Its Plan. Upon confirmation of its Plan, IBC also had material performance obligations under the Player Contracts including the following: 1) IBC Had Material Performance Obligations Associated with the Players' Pension Plan (a) In connection with the employment of its Players, IBC created a Pension Plan for its players. The Pension Plan constitutes a significant aspect of the consideration to the Players in entering into the Player Contracts and is expressly mentioned in the Player Contracts. Participation in the Pension Plan and treatment thereunder were dependent on performance under the Player Contracts. In addition, the United Basketball during the term of its licensee [sic], participate in live and recorded radio and television programs and commercial announcements, interviews and personal appearances, pose for pictures, record his voice, supply his biographical data and in any way engage in all means and media of advertising, publicity and promotion that will, in HGI's reasonable opinion . . ." The term of the purported Licenses granted being perpetual, it follows that Rivers and Thorton had a permanent obligation to participate and make appearances to promote the Globetrotters at IBC's discretion until such time as the Licenses terminated. IBC had not terminated these rights prior to confirmation of its Plan. The obligation to promote IBC at IBC's discretion constitutes additional material
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Players Association, the Players' union, negotiated a collective bargaining agreement requiring that players entering into player contracts be entitled to participate in the Pension Plan as consideration for their services as players. IBC did not assume or reject the Player's Pension Plan or collective bargaining agreement during the course of its Chapter 11. (b) It is a well accepted principal of law that where two or more contracts are part of a single transaction and appear in combination to constitute the entire understanding of the parties, the contracts are customarily read and treated together as one, integrated contract. See 17a AmJur2d, Contracts, §379 (and cases cited therein). In this case, the Pension Plan, Player Contracts and Collective Bargaining Agreements constitute a single transaction by setting forth the entire understanding of the parties' relationship and is one integrated contract. (c) Under the Pension Plan, IBC had the obligation to not only make pension payments for many years beyond the confirmation of its Plan, it also had the obligation to administer requests for various early retirement options, calculate benefits, determine death benefits, confirm eligibility, determine the form of payment, and approve or deny requests for various types of payments. IBC also had to comply with any current or future ERISA requirements related to the Pension Plan. (d) Each of the foregoing material obligations remained in respect to IBC's performance under the Players Contracts upon the confirmation of its Plan. Based upon the facts and law discussed above, it is clear that, as a matter of law: · The Player Contracts were executory contracts for purposes of Section 365 of the United States Bankruptcy Code ("Code") on May 26, 1993; IBC rejected all of its Player Contracts pursuant to Article X, Section A of its Plan effective May 26, 1993 (Exhibit "4(B)"), the date IBC's Plan was confirmed by the Bankruptcy Court, (Exhibit "4(A)");
22 23 24 25 26 27 28 · · IBC's rejection committed a material breach of the Player Contracts such that IBC had no legal right to assign the benefits of the Player Contracts, including but not limited to the right to assign the purported Licenses; and The purported Licenses could not be transferred to HGI pursuant to the Assignment, nor transferred to Jackson pursuant to the Asset Purchase Agreement. --
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Because HGI had no basis to assert any rights in Plaintiffs' old player contracts, HGI willfully violated Plaintiffs' rights. WHEREFORE, for all the foregoing reasons, Plaintiffs respectfully request the Court to enter summary judgment in favor of Plaintiffs and against HGI and FUBU for violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), invasion of Plaintiffs' right of publicity, unjust enrichment and false light
6 (invasion of privacy). 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 served via first class mail upon the following attorneys: 23 24 25 26 27 28 Joel L. Herz, Esquire LAW OFICES OF JOEL L. HERZ LaPolma Corporate Center 3573 E. Sunrise Dr., Suite 215 Tuscon, AZ 85718-3206 Attorney for Defendants GTFM, LLC, FUBU the Collection, LLC and GTFM Of Orlando, LLC PLEASE TAKE FURTHER NOTICE that copies of the above-referenced documents have been By: ____/S/ Clay M. Townsend___________ CLAY M. TOWNSEND, ESQUIRE Florida Bar No.: 363375 KEITH MITNIK, ESQUIRE Florida Bar No.: 436127 BRANDON S. PETERS Florida Bar No.: 965685 Morgan & Morgan, PA 20 N. Orange Avenue, 16th Floor Orlando, FL 32802 Telephone (407) 420-1414 Facsimile (407) 425-8171 Attorneys for Plaintiffs Fred Neal, Larry Rivers, Robert Hall, Dallas Thornton, Marques Haynes and James Sanders DATED this _28th day of October 2005.
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Edward R. Garvey, Esq. and Christa Westerberg, Esquire GARVEY AND STODDARD 634 W. Main St. #101 Madison, WI 53703 Attorneys for Defendants Harlem Globetrotters Int'l, Inc., Harlem Globetrotters Int'l Foundation and Mannie L. & Catherine Jackson Anders Rosenquist, Jr., Esquire Florence M. Bruemmer, Esquire ROSENQUIST & ASSOCIATES 80 E. Columbus Phoenix, AZ 85012 Attorney for Plaintiff Lemon Safia A. Anand, Esquire Ira S. Sacks, Esquire DREIER, LLP 499 Park Avenue New York, NY 10022 Attorneys for Defendants GTFM, LLC, FUBU the Collection, LLC and GTFM of Orlando, LLC Certificate of Service Vanessa Braeley, declares as follows: 1. I hereby certify that on October __28th_, 2005, a true and correct copy of the Plaintiffs' Motion for Summary Judgment was electronically transmitted to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Safia Anand [email protected]
20 Florence M. Bruemmer [email protected], [email protected] 21 22 23 24 25 26 27 28 2. I am and was at all times mentioned herein a citizen of the United States and a resident of Orange County, Florida, over 18 years of age and not a party to the within action or proceeding. My business address is 20 N. Orange Avenue, 16th Floor, Orlando, FL 32801, and I am employed as a legal assistant by Morgan & Morgan, P.A., Clay Townsend is an attorney admitted to practice in Florida and has been admitted pro hac vice in the District Court of Arizona, and directed that service be made. Joel Herz [email protected], [email protected] Ira Sacks [email protected]
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3. I hereby certify that on October ___28th_, 2005, a true and correct copy of Plaintiffs' Motion for Summary Judgment, postage paid thereon, was sent via U.S. Mail to the following parties, at the addresses listed, to-wit: Joel L. Herz LAW OFFICES OF JOEL L. HERZ LaPolma Corporate Center 3573 E. Sunrise Dr., Suite 215 Tuscon, AZ 85718-3206 Attorney for Defendants, GTFM, LLC, FUBU the Collection, LLC and GTFM OF Orlando, LLC Anders Rosenquist, Jr. Florence M. Bruemmer ROSENQUIST & ASSOCIATES 80 E. Columbus Phoenix, AZ 85012 Attorney for Plaintiff Lemon Edward R. Garvey Christa Westerberg GARVEY AND STODDARD 634 W. Main Street, Ste. 101 Madison, WI 53703 Attorneys for Defendants Harlem Globetrotters Intl Inc. and Harlem Globetrotters Int'l Foundation Safia Anand, Esquire and Ira S. Sacks, Esquire DREIER LLP 499 Park Ave. New York, NY 10022 Attorneys for Defendants, GTFM, LLC, FUBU the Collection, LLC and GTFM of Orlando, LLC 3. I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. DATED: October _28th_, 2005 Signed: ____/S/Vanessa L. Braeley_________ Vanessa L. Braeley Legal Assistant to Clay Townsend MORGAN & MORGAN 20 N. Orange Avenue, 16th Floor Orlando, FL 32801 Attorneys for the Plaintiffs Curly Neal, Larry Rivers, Dallas Thornton, Marques Haynes, Robert Hall and James Sanders
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